Russell Winer – Advertising in 2020

Russell S. Winer, Professor of Marketing, Stern School of Business, NYU

The goal of this essay like the others submitted for this project is to conceptualize what advertising will look like in 2020.  Some believe that advertising through “traditional” media like TV, print, and radio will vanish due to competing technologies causing these media to disappear.  While it is virtually certain that by 2020, the current “dumb” TV will be largely replaced by “smart” TVs that are basically large computer monitors linked to the Internet, it is unlikely that the billions still spent on conventional (e.g., 30-second commercials) TV advertising will go to zero.  In fact, while the share of TV advertising spending as a percentage of the total spending on advertising is declining, it is still about 37% of a very large number.  In addition, there are still many readers that like hard copy magazines.  While the death of magazines has been predicted, there will still be substantial demand for these advertising-supported media. The same holds with radio.  Outdoor, in fact, is seeing a resurgence with the adoption of interactive technology to enhance customer engagement as well as other technological improvements.

Thus, rather than focusing on the media technology itself, I would like to emphasize four characteristics of advertising that I predict will be implement by 2020.  These include: (1) it will be much more interactive, (2) it will be much more customized, (3) it will be location-specific, and (4) companies spending will be considerably more efficient.  While the trends point to all of these today, by 2020, implementation will be firmly in place.

Advertising will be more interactive

By 2020, advertising will largely be interactive permitting customers to respond to the advertisers’ communications.  While this is obviously the case today with digital advertising through the Internet and mobile devices, full interactivity has yet to hit the “traditional” media save outdoor.  An additional step through a phone call or a trip to a Web site is still necessary to respond to a TV, magazine, or radio advertisement.  Magazines have become somewhat interactive through the use of QR (Quick Response) codes but these are rarely used.  One survey I have seen showed that only about one-third of consumers even know what they are for.  The QR interface is still pretty clunky as the smartphone apps need to be fired up and then moved around for a while until a signal is detected.  Improvements in this interface will make print really interactive.

TV, of course, is the big target for interactive advertising.  Attempts to make TV interactive have been around for 15 years or more.  As I noted above, by 2020, most TVs will be linked to the Internet so interactivity will be a given.  There have been some attempts to permit consumers to mouse over characters on a TV show and be subsequently transported to a Web site but, like QR codes, the interfaces are clunky.

Advertising will be more customized

Undoubtedly, advertising will become more and more customized to the point where in 2020, there should be little advertising through personal media (i.e., TV, print, mobile) that is not tailored to the viewer.  As I noted above, progress is being made in this area, especially on the Internet.  Personalized retargeting where advertisers track a Web site visitor and entice him/her to return is common.  TV personalization, largely done through digital cable boxes, is very crude but the combination of the new interactive TV technology with the data obtained from viewing and Web site habits will prove irresistible to personalization.

Customization will exist not only on the supply side but on the demand side as well, particularly for TV.  That is, consumers will be able to determine whether they want to see commercials on TV.  Now, consumers can pay for smart phone applications if they do not want to see ads (free apps usually imply ads being served).  It is possible that more opportunities will be available for consumers to decide whether they wish to see advertising-supported programming on TV through extra fees.

Location-specific

The “holy grail” for mobile advertising is catching customers at the point of transaction. Increasingly, retail stores offer communications and promotions within the store but these are neither customized nor linked to a customer’s mobile device.   Like the previous characteristics of advertising, implementation successes to date have been minimal with a few offerings of coupons to fast food companies, for example, being offered when the mobile device GPS detects that a consumer is close one of the outlets.  By 2012, the technology for doing this smoothly and frequently will exist.

Efficient

While John Wanamaker’s notion of over-spending on advertising was over 100 years ago, it is still the case that most companies do not have a good idea about their optimal advertising resource allocation.  This is changing quickly, however, with more and more attention being paid to the development of sophisticated market response models and the pressure that CEOs and CFOs are putting on senior marketing personnel to demonstrate the ROI of marketing expenditures.

Due to the interactive nature of advertising in 2020, its impact will be highly measurable.  The beauty of digital advertising is that it is both measurable and has significant potential for controlled field experimentation.  The combination of these to characteristics of advertising in 2020 will result in much more efficient allocation of marketing resources in general and of advertising spending in particular.

So, the question is what do we need to do about all of this today to ensure that we see this happen by 2020?  As can be seen in this essay, what advertising will look like in 2020 is inextricably linked to changes/improvements in media technology.  While media companies (agencies and advertisers) would not be expected to develop the technology, it is essential that they quickly embrace it and adapt to these changes along the four dimensions noted.  Everyone in the media ecosystem will gain from the rapid and effective adoption of improvements in digital technology.